He has also
co-founded two notable space related businesses. Space
Adventures offers various space related adventure tourism
packages and the company helped to arrange the flights of Dennis
Tito and Mark Shuttleworth to the Space Station. Zero
Gravity Corporation (ZERO-G) formed in the US last year to
offer offer weightlessness experiences on an airplane flying parabolic
trajectories.

In this interview,
however, I concentrated on one of his most innovative and potentially
most influential projects: the
X PRIZE. Ten million dollars and a beautiful trophy will go
to the first non-governmental team that: "finances, builds
& launches a spaceship, able to carry three people to 100 kilometers";
returns safely to the earth; and then repeats the feat again within
two weeks.

The
goal is to encourage the private development of low cost space transportation
in an step-by-step approach, starting with an easier target than
reaching orbit. The competition is patterned after the aviation
prizes of the 1920s and 1930s that contributed so significantly
to the development of aviation.

Since the
non-profit X PRIZE foundation started in the mid-1990s the momentum
of the project has steadily grown and recently accelerated. Full
funding of the $10 million prize money was attained last year
and it must be awarded by January 2005. Twenty-four
teams have registered for the contest and several indicate
that test flights will begin this year.

Dr. Diamandis
kindly agree to answer some questions that I sent him concerning
the project's latest developments, the challenges of creating
such a contest, and how the X PRIZE could put us on a path to
low cost access to space .

HS:The
X PRIZE race is getting serious. It really looks like several
competitors will be doing test flights this year and flights for
the money next year.

Has
the time that it has taken for teams to develop vehicles been
longer or shorter than you originally expected?

Diamandis:
When we kicked off the X PRIZE in 1996, we expected that launches
would take place sometime between 2002 - 2004. So, the timeframe
stayed within my expectations.

As with anything new, it took time for the X PRIZE to catch on, and also
time for the teams to become serious and raise their own funds. We are
really expecting a winner within the next 12 - 18 months. I wouldn't be
surprised if a team or two attempted launches on or near the December
17th 2003 Centennial of powered flight.

HS:Are you surprised by the large number
of groups that have signed up? ?

Diamandis: I am not surprised by the large number of teams who
wish to compete. The world is full of innovative, creative people who
also dream of going into space. The winner of the X PRIZE will be known
as the Charles Lindbergh of the 21st century as the person who brought
spaceflight to everyone. I think that the current X PRIZE teams represent
only a small fraction of the groups who could actually develop suborbital
spacecraft if the funding for such developments were more easily available.

HS:
I notice that the contest description
on the website still makes a distinction between guidelines and rules
and emphasizes that the list is "not a final set of rules." Was this
intended to maintain flexibility so that no potentially viable approach
was ruled out unintentionally?

Diamandis: The use of two terms is a carry over from the start
of the competition. We used the terms Guidelines in the beginning before
we had our financial sponsors in place. We wanted to leave the door
open so that someone putting up the money might want to modify the rules.
This hasn't happened. The Rules are now finalized.

HS:
While several of the designs involve straight forward single stage
approaches, others seem rather complex, e.g. balloon platforms,
multi-stage vehicles, drop-off solid rocket motor boosters, water
landings, etc. I understand, of course, that the teams should
go for whatever design they think they can build and that can
win the contest. However, these operational complexities make
it more difficult to reach the project's goal of "economical vehicle
reusability."

Has
there been much discussion within the X PRIZE organization about
whether to limit the complexity of the designs (besides the limit
of 10% replacement of non-propellant mass between flights)? Or
is the main goal

at this point just to get something that flies
to the 100km as a proof-of-principle?

Diamandis: As mentioned before, the X PRIZE does not want to
stifle decisions with respect to innovative and non-traditional designs.
We do not want to rule out non-traditional designs as that may run the
risk of missing an opportunity for innovation. Designs that appear to
be outside of the spirit of the X PRIZE mission of promoting space tourism
are discussed between the individual team and the X PRIZE on a case
by case basis.

We keep in mind that while Lindbergh's Ryan aircraft won the Orteig
Prize, that vehicle was never used for transatlantic service. Our major
goal is to create a significant public paradigm shift about how we all
perceive spaceflight. We want the public to know that it will be available
to all of us.

HS:
From looking at the current
entrants, how far are we from vehicles that will achieve the goal of
"low-cost [sub-orbital] spaceships for travel, tourism and commerce."

While cost thresholds are a matter of personal perception, I believe
that we will see frequent, regular, low-cost space travel within five
years. I can imagine that the X PRIZE will generate three to four viable
operating vehicles within the next two years, and then the process of
making these vehicles more robust, as well as compliant with regulatory
objectives (e.g. FAA regulations), could take an additional three years.

HS:
As I understand it, much of the prize funding will disappear if
no one wins the competition by January 1, 2005. While not exactly
a deadline - the trophy and whatever is in the pot could still
be awarded later I assume - it will effectively act like one.

I
expect there will be a winner by that date but I also remember
the Space
Frontier Foundation's CATS
competition. It looked like several teams were going to beat that
deadline as well but all fell short. The X PRIZE originally did
not involve a deadline. Would you have preferred to avoid a deadline?

Or
do you think that since viable teams have now formed, a deadline
is a good way to concentrate their minds and light a fire under
them, so to speak?

Diamandis: You are correct in your observations. First of all,
I am confident about the ability of a team to win by January 2005. The
Trophy will be available beyond that point. The addition of the deadline
was a result of our funding, and also the realization that a deadline
helps focus the competition and bring about the result at an earlier point.
We will always have the option to extend the deadline if necessary and
if we are able. The Orteig Prize, for example also had a deadline of 1925
which was later extended and won by Lindbergh in 1927.

HS: I suppose
there are details of the funding arrangement with the insurance company
that you don't want to get into, but perhaps you can discuss it in general.
Am I wrong to say that basically it is a bet? That is, part of the money
previously raised is being wagered on there being a winner before Jan.1,
2005? If there is no winner by that date, what percentage of the funding
disappears?

Diamandis: The X PRIZE is fully funded through January 1, 2005,
through private donations and backed by an insurance policy to guarantee
that the $10 million is in place on the day that the prize is won. The
X PRIZE Foundation is a non-profit organization and is working to raise
funds to support the X PRIZE competition events and as well as future
competitions. Because we rely on private
donations, it is not possible to predict our financial position
two years from now. If any of your readers want to make a contribution
or volunteer with our organization, we would be pleased to have their
support. They can do this by calling our offices at 636-519-9449 or
through our website at www.xprize.org
. We are a public non-profit organization and welcome the participation
of the public. That's what it is all about.

HS:
I've
heard space entrepreneurs talk about a "brother-in-law effect".
They would make a presentation to a potential investor who responded
with great enthusiasm and a promise to soon make a contribution.
However, a few days later, after hearing nothing, they would contact
the investor who responded that he or she was no longer interested
because a brother-in-law who works at NASA said that what they
were doing was all crap!

I
thought of this when I read about the insurance arrangement. I
imagined that the insurance company contacted various people,
maybe even a brother-in-law or two : - ) , at NASA and the major
aerospace companies who flippantly responded that the prospect
of small private organizations building high altitude manned rocket
vehicles was preposterous.

Am I over-simplifying or is there some truth to
this? Has overcoming the common perception of rocketry and spaceflight
as impossibly difficult for all but governments and large companies been
the main obstacle to raising funds for the prize? It looks like you turned
that perception from an obstacle into an advantage.

Diamandis: I'm not a liberty to provide
any details about the workings of our insurance policy or how they reached
their decision. It is, however, fair to say that the traditional aerospace
industry might consider the X PRIZE flights non-trivial. They might
also discount the ability of many of our teams to complete these flights.
We need to remember that most innovations and breakthroughs come from
small groups and from non-traditional solutions to problems. We're hopeful
that this will happen at the X PRIZE as well.

HS:
I think that it's fair to say
that sub-orbital flight has not been of tremendous interest to space
activists - seemed boring compared to reaching orbit. For example, until
the last couple of Space
Access Society meetings, of the 6 or so that I've attended, there
was little promotion of sub-orbital except by Pat Bahn (TGV
Rockets) and maybe one or two others. Now
in this post-Iridium-Apocalypse period, when no one can find money for
orbital vehicles, sub-orbital is looking great, especially with surveys
indicating a substantial market for sub-orbital space tourism.

When you started the X PRIZE,
was it a struggle to build support for sub-orbital flight when even
many space enthusiasts were not very enthusiastic about it? Do you feel
they are starting to see the light now?

Diamandis: I'm proud of the fact that the X PRIZE put suborbital
flight back on the map. Before our announcement in 1996, no one was
thinking about this as a market or a useful technology. X PRIZE basically
defined 100km and three people as a new class of launch capability.

I believe people now fully get the idea that we need to start with
a near-term achievable step that can generate a profit and then build
from there instead of jumping straight to orbit.

While orbital flight would be the ultimate goal of all space entrepreneurs,
including myself, without major breakthroughs in technology, affordable
orbital flight appears to be many years away. Suborbital flight technology,
on the other hand, is achievable now, at a reasonable cost and will
ignite the world's interest and enthusiasm for space.

Recent, independently conducted studies also support the financial
viability of suborbital companies and the large market for suborbital
flight. The Futron study (October 2002) projects a $1 Billion market
in ten years' time.

HS:
You often cite the aviation prizes in the early decades of the
1900s as the precedents for the X PRIZE. An additional connection
to that period that I like to emphasize is that it was the time
when modern rocketry was invented and developed by individuals
like Goddard and Oberth and by private groups such as the various
space and rocketry societies. Spaceflight really began then as
a grass-roots phenomena with little involvement by governments.

Later
during the post-War period, everything got inverted by the huge
missile and Moon Race programs. Instead of participants, we all
became spectators to what government was doing in space. Now it
appears with projects like the X PRIZE we are moving away from
this top-down approach and getting back on track (after a ~65
year interruption!) with semi-amateur organizations and small
companies developing rocket and space technologies again in a
sustainable, bottoms-up approach - similar to the way PCs and
most other technologies started small and gradually grew and blossomed.

Do you think that space activists in general
have wasted too much time and energy on promoting overly-ambitious projects,
especially government funded ones, and should instead concentrate on
a steady step-by-step approach? Do you think that with such an incremental
approach, we can, in fact, eventually reach orbit, build space hotels,
establish lunar colonies, etc., without relying primarily on large funding
from governments?

Diamandis: I am a space enthusiast and support space activities
regardless of funding source, scale and size. I believe that providing
spaceflight for the general public is not and is unlikely to be part
of the mission of governmental space programs. The government's role
is two-fold: research and development on one end of the spectrum, and
exploration on the other end.

So long as the government has the only ride into space, it will not
be available for the rest of us to go. In addition, the government is
unable to take the levels of risk that the private sector can take in
developing, testing and implement new launch approaches.

The analogy between the early room-size government computers and today's
laptops is probably appropriate. The profit motive afforded by the future
space-tourism market (in the short term) and the space-based resource
market (in the long-term) will be the most critical driver to create
a new generation of low-cost, safe spaceships.

Eventually suborbital flights will lead to orbital flights, space
hotels, colonization and beyond.

HS:
After
the X PRIZE is won, there will be quite a letdown among all those
groups that lost. Ideally, the winner and some of the runner-ups
will continue with sub-orbital vehicle development for tourism
and other potential markets. However, just as there were many
aviation prizes, it could help the cause if there were other challenges
and trophies to strive for.

I just read today [Jan.20th, 2003] that you have been thinking
about more competitions after the X PRIZE. Could you elaborate?
Ed Wright has promoted rocket flights at air show exhibitions
and even rocket races. Do you think such events could also help
to keep the momentum going, especially if regulatory problems
slow the development of sub-orbital tourism?

Diamandis: The X PRIZE is only the beginning.
While there will only be one winner of the X PRIZE Competition, the
other runners-up are likely to continue to develop their ships to capture
the public spaceflight market. The real long-term winners will be those
who make profitable business from their designs.

Once the X PRIZE is won, I hope that there will be a major flow of
cash from the investment community into private space-related ventures.
This was the case after Lindbergh's flight in which aviation stocks
skyrocketed.

We are now thinking about follow-on prizes. For example a trans-oceanic
flight requirement that might yield a launch capability for same-day
package delivery or same-day passenger travel.

We also are looking at something called the X PRIZE Cup which is a
follow-on fashioned after the America's Cup competition…only using spaceships.

Perhaps the most important outcome will be the creation of a new marketplace
that will help us drive technology. The year before Charles Lindbergh
flew from New York to Paris, something on the order of 6,000 people
flew in airplanes. The year after he made his historic flight, over
180,000 people took airplane rides. The market and the need for suborbital
vehicles will grow significantly after the X PRIZE is won. We are working
closely with our friends at the FAA and NASA on regulatory issues and
strategies. I do not believe there will be showstoppers in that area.

HS: Thanks
very much, Peter. And best of luck to the X PRIZE
competitors!

Addendum:
The questions above were submitted to Peter before the Columbia tragedy.
In this essay for Space News - More
Frequent Space Flights Needed - Feb.5, 2003 - Peter discussed how
we can honor the legacy of the Columbia crew by recommitting ourselves
to developing "low-cost, safe and accessible human spaceflight."

Addendum 2 : I sent one follow
up question to Peter concerning regulation of suborbitals:

HS: I recently
participated in a campaign on Capitol Hill to inform Congressional staff
about the development of the sub-orbital industry and its needs with
respect to regulations and insurance. (See Jeff Foust's writeup
[and mine])
I've worried that a sub-orbital tourism industry might be killed in
the cradle by heavy regulations but in general I was quite heartened
by the encouraging remarks from the FAA-AST and Commerce spokespersons
at the breakfast meeting and the positive feedback from the staffpersons.

How do you see the regulatory situation with
respect to the US X Prize projects? Is the X Prize organization working
directly with FAA to help to prevent potential roadblocks, e.g. it would
be a shame if a group is ready to fly in the summer of 2004 but doesn't
get its license till January 05!

I assume the groups plan to fly with only one
pilot and extra ballast to represent the 2 passengers. In this case
they would be able to fly with an experimental aircraft license. With
the release last August by AST of the Advisory Circular on RLV licensing,
would you encourage teams to seek a license under that regime instead?

Diamandis: "Good question. I tell people
that the two greatest challenges of opening the public space flight market
is (1) availability of investment capital and (2) regulatory issues. It
has never been about the technology. I'm very pleased with the level of
enthusiasm and support that Patricia Smith, the Associate Administrator
of the FAA-AST has given
the X PRIZE and the U.S. Teams.

We require that all the teams abide by the rules and regulations of
the country from which they launch. So if it is determined that within
the U.S. a team needs FAA-AST approvals to launch, they will need a
license.

The biggest difficulty is what happens after the X PRIZE gets won.
How do we start a viable Public Spaceflight Industry in which people
can buy tickets. The cost of "certifying a spaceship" that would allow
you to sell tickets will be very tricky.

Today's new airplanes must undergo an elaborate "certification" process
before they are allowed to carry fare-paying passengers or cargo. Certification
typically involves performing more than 1000 test-flights in order to
collect extensive operating statistics; the average cost of certifying
a small business jet aircraft can run in excess of $100 million, or
up to 10 times the cost of developing the initial prototype vehicle.
The time taken for such certification commonly exceeds three years.
If such large investments of time and money are to be required of the
nascent space tourism industry, great difficulties would be caused that
would seriously hinder the creation of any viable start-up space travel
companies.

The stated goal of the FAA is to achieve 100% safety record. This is
a difficult and demanding objective and is the result of many decades
of evolution of progressively safer and safer airline systems. Should
this goal also be applied even to the earliest space tourism vehicles,
the cost of certifying a human-rated space launch vehicle would become
prohibitive - assuming that a certification process would ever be developed
at all!

The question arises: "How should the U.S. government facilitate the
creation of a space tourism industry that does not need to meet the
extremely strict standards that the FAA requires of mature aviation
services?" Is it possible to devise a legal construct which could allow
for would-be space tourists to accept some risk themselves? After all,
if the aviation industry had been held to a safety requirement as demanding
as today's during its formative years from 1910 - 1940, today's rich
tapestry of aircraft designs and capabilities could never have developed.
A promising answer to this question may be found by looking at another
part of the U.S. government.

There is another regulatory body which also has the job of protecting
unsuspecting members of the general public from being deceived by people
with specialized professional knowledge. This organization is the Securities
Exchange Commission (SEC), which is intended to prevent unwitting members
of the public from being taken in by companies operating various fundraising
scams. As such the SEC requires companies making an Initial Public Offering
(IPO) of shares to undergo a high degree of rigor in their disclosures
and processes. The resulting cost to a company of making an IPO is very
high.

The SEC however does not want to stifle young companies trying to raise
money from private sources. Consequently, in order to broaden the range
of fund-raising options, the SEC has created a category of fundraising
called "Regulation D" under which companies can raise funds from "Accredited
Investors" with less burdensome conditions than apply to IPOs.

Based upon the precedent of the SEC regulation I've proposed to Patti
Smith that the Federal Aviation Administration allow a "Private Carriage
Exemption" for travel aboard privately owned and operated spaceships
- namely the creation of an "Accredited Passenger" category of person
who will be exempted from certain FAA regulations that apply to scheduled
aviation services. The underlying objective is the same - to allow well-qualified
people to choose to undertake certain risks that are greater than those
involved in flying on a scheduled airline flight, in return for a rare
and exciting experience which the person values. In doing so they will
be helping to establish a new industry that is expected to grow into
the largest activity in space.